Part 1: The Core Functions of an Enterprise Strategy Department

Introduction

There are a multitude of ways in which organizations approach strategy from a departmental perspective. For leaders to benchmark their operations with respect to other organizations, it is beneficial to have a shared model[1] of enterprise strategy department organization.

Sales is about getting people to “yes,” whereas Strategy is about getting people to “no.” All organizations have limited resources, so it is critical to determine the objectives and initiatives that are most important to the organization and say “no” to those that are not a priority. To develop an effective strategy, leaders must prioritize goals and objectives, requiring due diligence, prioritization, and planning to make the best use of scarce resources.

A centralized strategic planning department enables leaders to develop a vision for the optimal future direction of the enterprise. A key deliverable is a rolling 3-to-5-year plan that organizes key activities for increased focus and resourcing. A best practice strategic plan has a cascading structure, where key efforts are aligned to groupings of programs and pillars in support of overall plan objectives:

Figure 1 Cascading Strategic Plan Structure

A cascading strategic plan also develops associated key performance indicators (KPIs) to develop baselines, goals, and tracking to measure progress. Once a strategic plan is agreed upon, most enterprise activities are then put into context with that plan. Often this shared mental model is referred to as a “north star” and allows for structured conversations around alignment, prioritization, and resource allocation.

The greater the mental model is shared across organizational objectives and priorities, the less energy spent on questions such as: “is this going to contribute to our overall objectives?” Teams take great comfort in being able to align their work toward the established priorities and goals for the organization. A well-articulated and prioritized plan provides a structure from which to have a focused conversation regarding resource commitments for key areas.

Taxonomy

So, who are the teams responsible working with the rest of the organization to craft, organize, and help deploy against this vision? There are many models with overlapping Venn diagrams of responsibilities, but here are the two core strategy department functions:

Figure 2 Enterprise Strategic Core Department Organization

Core Departments

The primary departments that make up strategy include Strategy Development and Strategic Planning. These teams typically report into a Chief Strategy Officer at the enterprise level, but could alternatively be embedded within finance, marketing, or business units, products, or brands.

Strategy Development

This function is most focused on net new directions, trends, programs, products, and the associated due diligence and business planning to see if these are feasible and warrant inclusion in the strategic plan.

Figure 3 Strategic Development Strategic Plan Involvement

Strategy development often helps validate new concepts, designs, and approaches at a high level to see if they:

Have alignment with current or future objectives
Can be accomplished
Pencil out from a financial (NPV) perspective (business plan development)

Some examples of strategy development include: the expansion of digital health services in healthcare, the expansion of products in new markets, and the development of new products for existing markets. In partnership with business sponsors, growth strategies are often in the realm of strategy development to identify, develop, justify funding, and gain approval for launch. Strategy development also plays a key role in identifying trends for incorporation into the strategic planning cycle.

Strategic Planning

This function is primarily focused on the development of the enterprise’s cascading strategic plan (see Figure 1) and the management of the plan (yearly planning cycle, tracking, etc.). The strategic planning function also works with stakeholders on facilitating long terms plans and roadmaps for the direction informed by strategy development.

For example, Strategic Planning (and Development) help determine that digital transformation and innovation should be one of the new enterprise strategic pillars for the 5-year plan. Strategy Development might have done the market assessment to determine that this topic should be a focus of the enterprise and worked on specific business plans with business owners for products that would be incorporated into the pipeline. Strategic planning helps take the vision, innovative ideas, in-process efforts, and incorporates them into a high-level deployment plan. Strategic planning, in partnership with strategy development and other business owners, then helps develop the 3–5-year roadmap and determine associated investment. This is not a detailed project plan (as is the purview of a PMO) but high-level estimates (timing, resources, etc.) to help inform trade-off decisions across all the strategic pillars, resulting in a total spend and resulting ROI for discretionary strategic spend.

This team would then help work with finance and business owners on the iterative process of refining these efforts to get enough clarity to make trade off decisions and funding allocations before committing to deployment. As there is overlapping responsibilities with plan refinement and development, many organizations have Strategic Planning personnel flex into Strategy Development as the need arises.

In the next part of this 2-part series, we will expand on the other functions that may reside within a strategic planning department, or be handled by the Strategic Planning and Strategy Development teams:

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[1] Agency for Healthcare Research & Quality (AHRQ) TeamSTEPPS training, https://www.ahrq.gov/teamstepps/instructor/fundamentals/module5/slsitmonitor.html

Enterprise Strategy Department Organization Primer - Part 1 of 2

Enterprise Strategy Department Organization Primer - Part 2 of 2

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